iThe Australian Competition and Consumer Commission says all industry bodies should take careful note of a court ruling on misleading advertising in the chicken meat industry.

The Federal Court yesterday upheld claims by the ACCC that Steggles ads, saying its chickens were "free to roam in large barns", were misleading because the chickens had a living space smaller than an A4 piece of paper.

The Chicken Meat Federation has told the ABC that little will change as a result of the ruling, because the industry has already stopped using the term "free to roam".

But ACCC commissioner Sarah Court says the commission is considering levelling penalties against the federation itself, which was also found to have engaged in misleading conduct.

"If industry associations want to get involved with these kinds of significant marketing campaigns, then the industry association needs to make sure that what it is telling its members and encouraging its members to do also falls within the confines of the law," she said.

"Industry associations across the board will now be sitting up and taking notice of their potential liability for this kind of conduct."

Federal Court judge Richard Tracey said the ability of the chickens to move around freely was most restricted in the early stages of their growth.

"Until the levels dropped at some point between the 33rd and 42nd days of the growth cycle, chickens could not, in my judgement, be said to be free to roam around the sheds at will and with a sufficient degree of unimpeded movement to justify the assertion that they were free to roam," the judgement says.

"They could not move more than a metre or so (at most) without having their further movement obstructed by a barrier of clustered birds."

As stocking densities were thinned after 4-5 weeks, Justice Tracey said the chickens could be considered "free to roam".

"By this time a bird which wished to move around the barn could weave its way across the floor through gaps between other birds or around smaller clustered groups," he said.

Yesterday's decision is the culmination of an 18-month battle by the ACCC against Baiada, which sells chickens under the Steggles and Lilydale Free Range Chicken labels.

Poultry producer La Ionica agreed in January to withdraw its "free to roam" claim and pay a $100,000 penalty.

The court also upheld claims from the ACCC that the Australian Chicken Meat Federation had breached consumer law by using the term "free to roam".